House Backs Bill to Crack Down on Medicaid Fraud

State Rep. Lois Kolkhorst, R-Brenham, explains Medicaid reimbursements on the House floor on April 4, 2013.

The House decorated an omnibus Medicaid fraud bill on Friday with a variety of amendments in a last ditch effort to save near-death health care legislation. The original version of Senate Bill 8, which the House tentatively approved, would allow Texas to take a more proactive approach to preventing and catching Medicaid fraud.

“We have seen in the last interim some very concerning, some very bad practices,” said state Rep. Lois Kolkhorst, R-Brenham, the sponsor of the bill and chairwoman of the House Public Health Committee.

SB 8, authored by state Sen. Jane Nelson, R-Flower Mound, would set up a data analysis unit within the office of inspector general at the Health and Human Services Commission to detect trends and outliers that may indicate fraud. It would also prohibit marketing to Medicaid recipients to sway their choice of medical provider and ban providers found liable or convicted of financial misconduct in any state or federal health care program from participating in Texas Medicaid. The state comptroller estimated the original bill would save the state $14.6 million in the upcoming biennium.

As an example of fraud the bill aims to tackle, Kolkhorst said dental providers have picked up children without their parent or guardian present, performed teeth cleanings or other dental work, and then charged Medicaid. The bill would require a parent or a designated guardian to take children to receive therapy, dental or medical services.

The House approved 15 amendments to the bill, many of which added language from other proposals that have died or have not been approved in the Senate yet.

Kolkhorst attached language from House Bill 595, which would allow Medicaid managed care plans to continue using the state's preferred drug plan and state formulary. “HB 595 is alive and well in the Senate; this is just an insurance policy,” she said.

State Rep. John Zerwas, R-Richmond, added a portion of House Bill 1032, which would require the adoption of national standards for medical preauthorization forms. The bill is one of a handful supported by the Texas Medical Association to eliminate red tape.

SB 8 would also increases requirements for emergency medical service licensing to weed out fraudulent EMS providers. The language — adopted from Kolkhorst’s House Bill 3556, which the House approved earlier this month — would require EMS firms to obtain a $100,000 line of credit, and provide the Department of State Health Services with a $50,000 surety bond. If EMS firms seek license renewal in subsequent years, the required credit line and surety bond would be reduced.

Supporters of the measure argue that it’s relatively easy to set up an EMS firm in Texas, which has allowed the proliferation of fraudulent providers. The financial requirements would not harm legitimate providers, they argue.

“These businesses sometimes fail to meet basic regulations or overcharge for services to make a quick profit,” according to supporters cited in a House report. “If the state begins an investigation of the firm, the owner can simply shut the firm and begin a new one through a friend or relative.”

Opponents of the measure argued the credit and surety bond requirements would increase costs for legitimate providers, which already operate on small profit margins.

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